Six months ago, there were 433 Covid-19 cases in India. That day the benchmark NSE Nifty 50 index tumbled 1,100 points, or 13%, in a day. It further fell the following day to a low of 7,511.
The number of confirmed Covid-19 infections in India has crossed 56 lakh, including more than 90,000 deaths. Yet, since March 24, Nifty 50 has recovered 46%, nearly rebounding to pre-pandemic levels.
Five charts that track the recovery even though Covid-19 cases are showing no signs of relenting:
Benchmarks Rebound
Nifty 50 has recovered 3,620 points from its March 24 low . 48 of the 50 constituents gained during the period.
Four stocks doubled in last six months, three gained 90-100%, while five rose 80-90%. Coal India Ltd. and Indian Oil Corp. were the only two stocks in the index that fell. Indian Oil declined 6%, while the largest global miner fell 5.3%
All sectoral indices returned gains. IT and pharma stocks rose the most, while the PSU Bank rose just 1%.
Reliance Industries The Biggest Driver
When most companies were reeling under the effects of the nationwide lockdown and its aftermath, the Mukesh Ambani-led behemoth first completed a rights issue worth more than Rs 50,000 crore, and then raised over Rs 1.5 lakh crore by divesting stake in Jio Platforms Ltd. to become net debt free. It also found two investors for its retail unit and is in talks with others.
The interest in Reliance Retail is so high that Ambani asked funds like Softbank and Carlyle Group to wait.
The result is evident in its stock performance. From the lows of Rs 867 on March 23, the stock has gained 154% to emerge as the top Nifty 50 gainer during the six months. And it’s the biggest contributor to Nifty 50 rebound.
Out of the 3,620 points recovery in the benchmark, 943 points or 26% came from Reliance Industries. Infosys Ltd. contributed 386 points.
The Joker In The Pack
A sector that immediately felt the impact of the lockdown was auto. So much so that all companies reported zero or minimal sales in April.
The recovery for the auto sector too was swift. Truck and auto component makers led the revival, beating passenger vehicle companies.
Three out of the 15 constituents on the Nifty Auto index gained more than doubled % over the last six months. Mahindra & Mahindra Ltd., with gains of nearly 109%, was the best performer on the Nifty 50 index after Reliance Industries.
Small Caps Surge
While mid-cap stocks tracked the benchmark indices, the small-cap surged more than 60% from the lows of March.
Sectoral tailwinds for stocks such as Laurus Labs Ltd. (up 326%) and Granules India Ltd. (up 210%), both makers of bulk drugs, contributed to the gains for the small-cap inded. As did Dixon Technologies Ltd. (up 173%) and Affle India Ltd. (up 172%).
12 stocks gained 100-150%, while nine surged 150-200%.
Betting On Underperformers
Analyst see the biggest upside potential in stocks that underperformed in the last six months.
Of the 10 stocks with the highest 12-month return potential, according to estimates compiled by Bloomberg, nine rose up to 20% in the last six months.
Six of these were state-run companies, with a potential upside of 40-60%. The Nifty 50 constituent with the biggest potential upside is Bharti Airtel Ltd. (60%).
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